Electric vehicle maker Lordstown Motors released its Q2 2022 earnings report today, and despite not delivering an EV yet, the company posted its first operating profit.
Lordstown Motors ($RIDE) is often included in the same discussion with the group of recent EV makers to go public, like Rivian and Lucid Motors. Like many of its peers, the company is having its fair share of struggles scaling production.
If you remember, the current EV leader, Tesla (60.9% market share), also initially struggled to mass produce its vehicles. In 2018, Tesla ramped production from around three cars a day to hit its goal of 5,000 EVs per week.
Though Lordstown still has yet to deliver its first vehicle, the company had big expectations coming into the market, targeting the light-duty work truck market.
In fact, Lordstown was widely expected to be one of the first to bring an EV truck to the market. But, legacy automakers like Ford and GM and even newcomer Rivian have beaten the company to market with its Rivian R1T.
The company has repeatedly delayed production to raise funds. And to make matters worse, Lordstown’s former CEO Steve Burns and CFO Julio Rodriguez abruptly resigned last year.
Since then, the company has had an executive shake-up. Last month, Lordstown announced Edward T. Hightower, the company’s president, would take on the role.
Our success and ability to execute our plan remains dependent upon our ability to raise additional capital.
However, he also noted the company is in a better cash position, with $236 million, than they planned. At the same time, Lordstown also has more runway and will need to raise less capital in 2022.
Lordstown Q2 2022 Earnings Takeaways
Lordstown Motors posted its first operating profit of $61.3 million, but not because of an EV sale. Instead, the EV maker is selling its Ohio factory to Taiwanese electronics manufacturer Foxconn.
The sale generated $101.7 million and another $18.4 million in operating expenses reimbursement. Meanwhile, Foxconn plans to use the facility to build Fisker’s PEAR EV.
The company has also formed a joint venture (JV) with Foxconn, in which Lordstown will be its primary EV partner in North America. The JV is looking for customers for its first produced vehicle.
Another key thing to note is Lordstown’s core operating expenses fell 33% from Q1 and 47% compared to last year. Lordstown’s Executive Chair Daniel Ninivaggi summed up the company’s Q2 2022 earnings excellently:
Over the past year, we have recruited and developed an experienced senior management team, made significant progress towards launching the Endurance, transitioned to a less capital intensive and flexible business model, established a new vehicle development platform with Foxconn, and raised some additional capital.
Lordstown is reaffirming its goals for 2022. The company plans to start commercially producing the Endurance EV in Q3, and deliveries are expected to begin in Q4.
Meanwhile, the ability to scale production of the Endurance will depend on if it can raise capital and lower costs. So far, Lordstown anticipates it will need to raise a minimum of $50 to $75 million, down from $150 million previously.
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Author: Peter Johnson